| Office | Virginia Employment Commission, employer accounts |
|---|---|
| Paperwork | Final quarterly reports from the seller; the buyer's registration and, if it applies, the waiver form for the experience record |
| Timing | A buyer that wants to waive the seller's experience record returns the waiver within 60 days of the acquisition date |
Watch for this: The waiver is not allowed when the two sides share ownership, management or control, or when the point of the transfer is a lower tax rate.
What the Experience Record Is
The Virginia Employment Commission sets each employer's unemployment tax rate using its experience: the wages it has paid and the benefits charged to its account. An employer with few claims tends to pay a lower rate.
That record can move to a buyer. For a company with a good history, that has real value. For a company with many claims, it is a cost.
When the Record Transfers
A buyer that takes over a business, or a clear part of it, is often treated as a successor and can take over the seller's experience record. The buyer then pays tax at a rate built on the seller's history.
The Waiver and Its 60 Day Window
A buyer that would rather start fresh can file the Commission's waiver form. It has to reach the Commission within 60 days of the date of acquisition, signed by someone authorized at the new company.
The waiver is not available in every case. It is not allowed when there is common ownership, management or control between the seller and buyer, and it is not allowed when the purpose of the transfer is to get a lower rate.
Partial Acquisitions
If the buyer takes only part of the company, the Commission needs to know how the payroll divides. The seller provides that information within 30 days of being asked. Keep payroll records by location or division so you can answer quickly.
Reports on Both Sides of Closing
The seller reports wages paid through the closing date and files its final quarterly report. The buyer reports wages from the day it takes over.
Switch payroll accounts, tax numbers and bank drafts at closing so neither side files on the other's account. Ask the Commission how wages already paid that year count toward the buyer's wage base.
Employees Let Go at Closing
If some staff are not hired by the buyer, they may file claims, and those can be charged to an employer account. Decide in the purchase agreement who carries that cost.
Our guide on handling an unsolicited offer covers why staff questions should be settled before you sign anything.
Checklist
- Pull the last rate notice and recent quarterly reports
- Confirm nothing is late or unpaid
- Talk with the buyer about the record and the waiver before closing
- File final reports on time and keep copies
Related steps: sales tax successor liability and articles of cancellation after an asset sale.
This page is general information, not tax or legal advice. Confirm current rules and forms with the Virginia Employment Commission, your CPA or your attorney. To plan your sale, request a sale estimate.